Small company with big ideas sees explosion in sales of entry-level smartphones this year

BARCELONA, Spain -- ARM creates the intellectual property used in the designs of more than 95% of the smartphones in the world, but the company had only a small booth at the edge of Hall 6 at Mobile World Congress here this week.

ARM, based in Cambridge, England, employs about 2,500 workers, many of them engineers who write the plans used to help companies build processors for smartphones and tablets.

For instance, Qualcomm buys ARM licenses to create the basis for its Snapdragon chips, some that integrate LTE radios, and Samsung's new Octa processor design incorporates eight different ARM cores.

"We're going to see a doubling in the performance of smartphone CPUs and GPUs (Graphics Processor Units) in the next 12 months," said James Bruce, lead mobile strategist for ARM, in an interview with Computerworld here.

In addition to processors like Octa, Bruce said the introduction of the Firefox OS is going to drive production of more smartphones in 2013, especially at low- and mid-range prices.

Many analysts predict that 1 billion smartphones will be produced in 2013.

High-end smartphones, sometimes called superphones, like the HTC One, the iPhone 5 and the Samsung Galaxy III, will get upgraded in 2013. Less powerful smartphones with fewer features will also appear, like the $48 (without subsidy) Spreadtrum Communications smartphones that are sold under a white label in China. Bruce said the Spreadtrum phone runs a single Cortex A5 chip, giving the performance that's almost up to the iPhone 3.

"In 2013, we'll see superphone growth that's consistent, but also explosive growth for the mid- and entry-tier smartphones," Bruce said.

"The smartphone market is not static, and if you compare what's happening now with five years ago when the first Android phones appeared, you would have to say the market's doing extremely well," he said. "It's not a fixed market and very dynamic. The Firefox OS is an example of how 2013 will be interesting."